29A - NSP2 AMEND TARGET AREA - Laserfiche WebLink

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Proposed Census Tract Rate as of 2009 992.02 19.06% 992.48 27.21% 890.04 26.91% 750.04 18.75% • Low Cost Mortgages and High Leverage: These four census tracts have high rates of HDMA mortgages made between 2004 and 2007 that are low cost and high leverage, according to HUD as of 2009. This is a good factor as a good predictor of foreclosure problems in the area. Proposed Census Tract Rate as of 2009 992.02 38.76% 992.48 22.06% 890.04 29.49% 750.04 30.56% As discussed in the City's initial application, a factor impacting market conditions in the City's target geography is investor purchases. CoreLogic data on recent sales in the City's target geography suggest that while the market is capable of absorbing about 10 percent of available foreclosed properties each month, roughly 33 percent of the purchases are made by investors as opposed to households intending to occupy them as their principal residences. The general practice among investors is to make only repairs that are absolutely essential, and then resell the homes at the highest possible sales price. In a continuing down market, they may rent out homes until the market changes and they can sell at a good profit. In such cases they tend not to worry about overcrowding or about keeping their properties in good repair. When investors are not able to sell their homes at a profit they tend to make minimum repairs and rent the substandard houses at market rental prices. In those instances where the housing market suffers a prolonged slump, and they are unable to sell or even rent, investors may abandon the homes they bought out of foreclosure. As unemployment levels rise and the pool of potential homebuyers decreases, investors can be expected to allow at least some of their properties to go back to their lenders. The Wall Street Journal is reporting that most economists are predicting a prolonged period of high unemployment. NSP 2 Substantial Amendment - City of Santa Ana Page 8 29A -10